Viacom Third Quarter Earnngs Preview

/0 Comments/in /by

Viacom (VIA/VIAb) reports before the open on Tuesday. Most investors are looking ahead to the split of the company that will occur at year end but this report could provide some insights on how the two new parts may perform right out of the chute as this is probably the last report as a combined company.
Estimates for VIA have fallen steadily all year in the face of sluggish advertising growth. Among major media companies, VIA has the greatest exposure to advertising at just under 50% of revenue. I surveyed analyst estimates focusing on segment level numbers and found little variation in expectations with the expectation of the volatile Entertainment segment that contains the Paramount movie studio. Overall, revenue is expected to grow 6-7% and EBITDA is expected to rise 4-5%….

Read more

Charter Communications Third Quarter Preview

/0 Comments/in /by

Charter Communications (CHTR) shares had a wild ride in the third quarter, falling to less than $1.00 in July, rising to $1.60 in August on the announcement of an exchange offer for company debt, and peaking at $1.80 in September on the announcement that the exchange offer was heavily oversubscribed. Since then, however, the shares have been in a steady decline and now sit at levels last seen just prior to the exchange offer announcement.
The problem for CHTR common is that as public values for cable subscribers have fallen below the multiple of debt to EBITDA on the company’s balance sheet. Since the company is unable to sell subs at accretive prices to the current debt level and given that CHTR generates negative free cash flow, there is no scenario for the equity to sustain significant value unless cable valuations head back up….

Read more

Lions Gate Entertainment Update

/0 Comments/in /by

Lions Gate Entertainment (LGF) rose almost 4% on Monday, enjoying its best day since early September when it popped 10% in four days to $10.60 on the back of reports of insider buying by about a dozen top executives. Since then the shares have pulled back steadily, reaching a closing low of $8.36 last Thursday.
It appears the reason for the pop yesterday was the announcement that Harry Sloan, founder of SBS Broadcasting (SBTV) has been appointed Chairman and Chief Executive of Metro-Goldwyn-Mayer. The SBTV buyout closed on October 18th so Harry was a free agent. The interesting tidbit for aficionados of LGF is that Sloan resigned as Acting Chairman and member of the board of LGF on June 30, 2005….

Read more

The Impact of Internet Advertising on Media Stocks

/0 Comments/in /by

In my recent reading of Street research on traditional media companies I have noticed two trends. First, analysts are beginning to adjust their multiples downward in their sum of the parts valuation multiples, finally reflecting the actual trading multiples of media stocks in the current market environment. Analysts are really just catching up to the multiple compression that has been going on all year and accelerating recently…

Read more

Central European Media Enterprises: Recent Weakness Should Be Temporary

/0 Comments/in /by

Central European Media Enterprises (CETV) shares have pulled back 10% since early October and about 15% since peaking in September. I think the current pullback will prove temporary with the company’s early November earnings report providing a positive catalyst. 3Q results won’t be exciting due to seasonally weak TV viewing in the summer but I expect the company to issue strong guidance for 4Q….

Read more

Dow Jones: Ugly But Not A Disaster

/0 Comments/in /by

Dow Jones (DJ) reported 3Q05 EPS of 12 cents, below consensus of 13 cents. The press release stated that 4Q05 EPS would be in the low to mid 30 cent range against current consensus of 47 cents. The press release went on to note that weekday ad lineage for the Wall Street Journal would be down in the mid-single digits despite meeting the “up slightly” guidance for September.
Upon reading this information I thought that the reaction in DJ stock would be ugly, much worse than current trading levels which are down about 2% from yesterday’s close. However, after listening to the conference call and reviewing other data, I think the news should be classified as disappointing but not a disaster.

Read more

New York Times: Still Too Early

/0 Comments/in /by

Maybe it is the redundancy of listening to my fourth newspaper conference call this earnings season but I found little of interest in the New York Times (NYT) earnings release or conference call. The company slightly exceeded its sharply reduced guidance, reporting 21 cents before adjustments against guidance of 15-20 cents. Revenue, expense, and margin trends appear close to analyst estimates so the variance appears to be non-operating. Revenues of $791 million were up 1% against a year ago indicating the tepid environment the company and the industry faces….

Read more

Knight-Ridder: Cheap But No Earnings Growth

/0 Comments/in /by

Knight Ridder (KRI) reported results in line with reduced expectations following management’s lower guidance a month ago. Excluding unusual items EPS came in at 67 cents, down 18% from a year ago. Revenue was flat and shares outstanding were down about 10% so the problem in the quarter relative to its industry peers was on the cost side. The following quote from the press release summarizes the quarter quite well:
“When you strip away the complexities associated with our asset sales and acquisitions, the story of the quarter is relatively simple: Excluding the acquired newspapers, total operating revenue was up 1.1% and costs — in a stark aberration from our normal pattern — were up 7.0% (or 5.5% if you exclude severance costs of $8.6 million).”
The press release went on to say in relation to costs “that level of cost increase will not be repeated in the fourth quarter.” On the conference call, management was emphatic that costs trends would improve dramatically in the fourth quarter, specifically guiding to 1% growth. Guidance for 4QEPS was also specific with management stating that above the year ago $1.16 was a sure thing and that current estimates of $1.25 were “in the ballpark.”

Read more

Swapping Some Small Cap For Large Cap

/0 Comments/in /by

Although I rarely make a trade intra-month in Northlake’s model driven ETF investments, last Wednesday morning I moved half of the small cap value exposure to large cap value. This resulted in a swap of the Russell 2000 Value ETF (IWN) into the Russell 1000 Value ETF (IWD)….

Read more

An Exciting and Illuminating Week for Apple Computer

/0 Comments/in /by

In the extended comments section at the bottom of this post is the commentary I wrote for StreetInsight.com immediately following Apple Computer’s conference call discussing its September quarterly earnings. As it turned out, I was right that the Street was overreacting when the shares were trading down 10% in after hours trading during the conference call. The next day, when the market opened, AAPL never traded down less than 6% and closed the day with a loss of just 4.5%. The volatility continued on Thursday when AAPL shares gained 9%, closing more than $2 above the pre-earnings close, after the company announced new iPods with video download capability and a refreshed iMac computer that comes darn close to merging your TV with your computer….

Read more